Biden administration sees carbon capture as key tool in climate fight

While there are many ways to soak up carbon from the atmosphere – ranging from tree planting to engineering changes in ocean currents – the administration and many polluting industries are betting on carbon capture and storage (CCS) as among the most promising methods.

Here are some details about CCS and the state of the industry:

DEFINING CCS/CCUS

Carbon capture and storage (CCS) and carbon capture, utilization and storage (CCUS) refer to the technology of capturing carbon dioxide directly from industrial facilities like refineries and power plants, and either sequestering it permanently underground in geologic storage sites or using it for other things.

According to the Department of Energy (DOE), there are enough underground geological sites in the United States to store 2.6 trillion tons of carbon dioxide, as much as the country has ever emitted plus centuries of future emissions.

But capturing, transporting and injecting carbon underground can be expensive, and there are questions about whether it can be done reliably, safely, and economically at scale.

With over $7 billion in taxpayer funds spent on CCS development since 2010, Congress is now mulling an administration-backed plan to expand subsidies for companies that employ CCS.

NUMBER OF PROJECTS

There are 12 active CCS projects in the United States so far, according to the Global CCS Institute, which tracks the industry. Together they have the capacity to store 19.64 million tons of carbon, roughly 0.4% of national emissions.

Only one of these projects, the Illinois Industrial Carbon Capture and Sequestration Project run by Archer-Daniels-Midland Co (ADM.N) in Decatur, Illinois, injects its carbon for permanent storage underground. The rest pump the carbon into oil reservoirs to boost pressure and increase production, a practice known as enhanced oil recovery (EOR).

EOR is relatively popular in the nascent industry because it generates some revenue from added oil production and can sequester some carbon underground.

But environmentalists argue that using captured carbon for EOR undermines the technology’s climate goals by prolonging the nation’s dependence on fossil fuels.

CCS FUNDING

Companies employing CCS are eligible for a tax credit, known as 45Q, that pays $50 per ton of captured and sequestered carbon and $35 per ton of captured carbon used for EOR.

The CCS industry has argued that rate is too small to promote growth.

The Biden administration’s proposed budget reconciliation plan, Build Back Better, would hike the credit amount to $85 for sequestration and $60 for EOR.

Fuels whose emissions have been reduced through CCS are also eligible to receive credits under California’s Low Carbon Fuel Standard (LFCS), a program that subsidizes fuels that are less harmful to the climate.

There are several other federal programs in place to support CCS development, including a new $2.1 billion low-interest loan program passed in the 2021 Infrastructure Investment and Jobs Act.

POOR PERFORMANCE

Despite the billions of dollars in investment to date, the CCS industry has failed to meet expectations.

A recent report from the Government Accountability Office found that of $1.1 billion invested by the Department of Energy in nine CCS projects between 2010 and 2017, just two are currently operational.

There have been several high-profile failures of CCS projects in recent years too, like the 2020 suspension of the $1 billion Petra Nova project in Texas, which missed its carbon capture goals by 17%.

But if new projects perform better, the technology could provide polluting technologies a lifeline, allowing them to continue operating without running afoul of climate mandates.